I’m the type of person who is always tinkering with new ideas. Whether its a new portfolio to test, a tool to create, or a tweak to make the site more intuitive and useful, creative new concepts never cease to capture my imagination.
But not every idea is a hit, and even when something is popular for a time that doesn’t mean that you can never let it go in favor of something better. Innovation requires change. And like cleaning out the old furniture, sometimes you have to make room for the new stuff.
I’ve been thinking a lot about the Portfolios page lately. Not only about new content I can add but also about how to keep people focused on what matters and fold everything into my larger goals. So I’ve re-tooled a few things, including scrapping a few redundant charts, improving a really good one, and adding a big new perk to support the people who make Portfolio Charts possible.
Here’s a quick rundown of the changes.
Cleaning Out the Comparisons Closet
While I have worked for years on tools to study one portfolio at a time, one of the areas of development I’ve been focusing more on lately is finding new ways to make portfolio comparisons easier. Tools like the Portfolio Matrix, Risk And Return, and Rank Over Time charts have looked for ways to compare lots of portfolios at a glance to speed up the process of narrowing down to a target portfolio that meets your needs.
I’m a stickler for information design that not only communicates data but also is truly helpful in shaping how people think about asset allocation, and personally I think one of these tools is clearly superior to the others. Looking at the usage data behind the scenes, I’m confident that you probably agree that the Portfolio Matrix is the top portfolio comparison option on the site.
It packs in so much information at a glance that the 2-metric limit on the Risk And Return chart seems pretty quaint in comparison. And I have always preferred its start-date-independent metrics over the more fickle Rank Over Time chart (and its predecessor the Returns Quilt) that focuses too much on specific start dates.
So as of today, I’m officially retiring the Risk And Return and Rank Over Time charts. As Marie Kondo might appreciate, I’d like to thank them for their contribution to our portfolio knowledge. But it’s ok to let go and focus on really making the Portfolio Matrix great.
Focusing the Optimizer
In the same spirit of cleaning things up to focus on the most important features, another small change is to the Optimizer chart. Previously, there was a setting that allowed you to overlay every named portfolio on the chart alongside every iteration of your chosen assets. Now, the named portfolio option is gone and it focuses exclusively on improving your portfolio.
The goal here is to help people focus on the coolest feature of the Optimizer — the ability to explore different asset percentages that may improve the risk-adjusted return of your chosen portfolio. Including all of the other portfolios is not only a bit pushy but also not truly a fair comparison, as many of them probably include other assets not in your portfolio at all. Removing them and focusing only on your selected assets is just a lot simpler and less distracting.
But don’t worry. For those of you who may miss the ability to calculate things like a custom real CAGR for so many named portfolios at once, I have a new option that you should like even more.
Upgrading the Portfolio Matrix
Looking back at a few years of reader suggestions, there are two Portfolio Matrix feature requests that stood out. The first is the ability to have more control over the compound growth metrics versus the fixed long-term and short-term baseline returns. And the second is something fellow engineers will surely appreciate — the ability to calculate a weighted total score for each portfolio based on all the other ranks.
Those are great ideas, and the new Portfolio Matrix now has both features!
The metrics now include a generic “Compound Return” which is fully customizable. Borrowing a feature from the Optimizer, it allows you to select your own version of the inflation-adjusted compound annual growth rate that matters to you. The default is the baseline 15-year return, which is the 15th percentile 15-year real CAGR looking at every rolling investing period since 1970. But you can also select the min, median, stretch, and max return for any investing length you like.
The Weighted Score is a new metric that generates a composite summary score accounting for the portfolio rank in every other category. You first adjust the weights for each metric on a scale of 0 to 5 based on what you care about. If you don’t want a certain column considered at all, just enter a zero. And if something is very important, make it a 5.
The way it works is that the weighted score allocates the most points to the #1 portfolio in each category, adjusts the points by the specified weights, and adds them all together. It then scales the total on a scale of 0 to 100. A theoretical portfolio that finishes #1 in every category would get a perfect 100 score, while one that finishes last in every category would score a lowly zero.
Here’s an example of how tinkering with the compound return and weight settings can affect the output.
Of course, there’s way more to the chart than just a weighted score. You can still sort by every other metric, and it will display the numbers for each portfolio on the right.
By calculating the performance of every portfolio — including your own — and making them very easy to sort and study, the Portfolio Matrix is in a class of its own for comparing portfolio options and evaluating tradeoffs. And with the new functionality, it is also more powerful than ever.
Helpful Features for Members
Just like performance metrics in the Portfolio Matrix, everything has a tradeoff. In this case, in conjunction with the Portfolio Matrix upgrade I’m transitioning it from a free chart for everyone to a core benefit for members. But if you’re not a member, don’t worry. Nothing is being taken away.
Following the same philosophy of the My Portfolio tool for members that compiles every chart in one convenient interface, nothing in the Portfolio Matrix is something that you can’t find on the site right now with a bit of time and no login required. Browse the performance section of each portfolio page, and you can still find datapoints like safe withdrawal rates, drawdown percentages, and baseline returns for any portfolio you can think of. No information is gated behind a paywall.
That’s important to me, and it won’t be changing. The Portfolio Matrix just saves a ton of time by doing some extra legwork and collecting a lot of data in one place.
While I totally understand if you’re bummed that a helpful tool is being moved to a membership perk, I hope you take heart and think of it more positively. Portfolio Charts remains one of the longest-standing resources for free global portfolio data out there. And since I’m always looking for ways to thank the members who make it all possible, offering a few timesaving features like the Portfolio Matrix and My Portfolio to the individuals who support the site just makes sense.
Done right, the end result is that everyone benefits. Author, members, and non-members alike. As Michael Scott would say, it’s a win-win-win situation.
If you want to take advantage of the new Portfolio Matrix and support Portfolio Charts in the process, I’d love for you to join the team and become a member! But even if that’s not for you right now, there’s still so much to enjoy. Browse the portfolios, fire up the interactive charts, and read the blog. They’re all completely free.
Membership or not, investing education is my passion and I’ve got your back.
Change Is Good
To the members who help make Portfolio Charts what it is today, thank you! Your continued generosity is a huge help, and I hope you enjoy the new features.
To customers who have purchased the Toolkit, be on the lookout for an update email with a new download including the fun new Portfolio Matrix design.
To non-members who just want to learn something new, you rock! I have lots of stuff for you, too. Read enough about how portfolio theory actually works in practice, and it’s likely to change your investing mindset.
And to anyone looking at their own figurative house and contemplating an upgrade, what are you waiting for? Make room for change, and you’ll improve your own situation one simple step at a time.
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